Why The House Always Wins

The other day, a couple of my friends were talking about gambling in casinos.

I don’t have much practical gambling experience; I haven’t even been to the “gaming section” of our two local integrated resorts. However, I know of friends who have made frequent “secret” visits to them.

Having studied advanced statistics, the mathematician in me tells me to avoid them and most other forms of gambling like 4-d and toto. Well, of course you can win from time to time but in the long run, the house has to win and the only way to win at gambling is to either become the house or to play like a professional player.

Because I am neither, I choose to stay out. 🙂

The games in casinos are designed such that the odds are in their favour. Unless you have a statistical edge, you can never ever win if you play there often enough.

Take for example a game that most of us will know well, roulette.

Roulette has either 37 or 38 numbers. 18 black, 18 red and 1 or 2 green.

If you bet on red or black, the chances of it coming out is less than 50% (because of the green number). When you win, your payout is only what you bet. Assuming bets are fairly even between red/black, the house will breakeven 36 times and win 1 game out of every 37 games.

Of course, if you play just 37 games, the numbers will not come out evenly but in the long run (say 100000 games), the distribution of the numbers that come out will be fairly even as long as the roulette wheel has not been rigged. This is all that the casino needs because they exist 24/7 and it is only a matter of time before actual results follow the theoretical expectation.

Professional players can win because they will try to adopt a strategy such that the statistical edge is in their favour. This is impossible in games like roulette and the jackpot machine but is possible in certain card games like blackjack and poker.

One way is to use card counting techniques to keep track of the cards that have come out so that you have a better probability of predicting the cards that are going to come out.

Casinos are not stupid so they also have anti-card counting measures in place to spot this. It’s pretty much a cat and mouse game and if you don’t know what I’m talking about, you can be sure you are very much the mouse. 😀

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3 comments

Steve F says 13 years ago

I have noticed that across the world the Chinese and Vietnamese take gambling very seriously. For people who are generally very “face” driven, family orientated and conservative, gambling and the concept of “luck” and fortune seems to be a weak spot. Hopefully a few generations of formal education will take care of this superstitious belief assuming that the casinos dont start sponsoring schools to persuade them not to teach probability theory in the same way that tobacco companies used to sponsor doctors.

I have visited a 3 casinos around the world and a couple of horse racing tracks. Typically I will give myself an allowance of a couple of hundred dollars to enjoy the evening and have a James Bond experience. Typically I come away with nothing left of the two hundred dollars (if i win it normally goes on the slot machines) but have fun anyway.

I’ve noticed the serious gamblers dont seem to have any fun at all and they never admit to losing. We went to the Singapore race track for an evening of fun and we came back with $40 from a $100 stake. We won on 2 races and lost on 5 and we spent the $40 on a meal. Probably typical ratios even for the people around me who were betting tens of thousands of dollars.

In the UK racing can be a fun day out even if you dont gamble. All I seemed to see around me in Singapore were angry men and scared wives probably wondering how they were going to feed the family next week.

Jasmin says 13 years ago

Hi,
Just to share in the casino, there is a game called Big Small. The chance of winning = chance of losing = 100%. For instance, you bet $1, you either get $2 back or $0.
Isn’t this better than buying 4D?

lioninvestor says 13 years ago

Is that the dice game? There’s a number where the house will win everything.

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Why The House Always Wins

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